Water Scepter
The Water Scepter is located in the lost city of Atlantis. To get there, you must have the oil can and the 68000 chip (I think). Find the pearl in the captain's cabin in the sunk galleon, then find the giant oyster and offer it the pearl. It will scoot over to reveal the tunnel leading to Atlantis.

Next to Neptune's Throne is a trident. Pick it up. The scene adjacent to Neptune's Throne has a hatch which will lead you down into a room with a pump in it. Go down into the room and close the hatch. Click on the pump to activate it, and the room will be drained of water. (If you don't close the hatch, you'll get the message that "pumps whir but the room is still full of water.")

Use the oil can to remove the rust from the airlock, then open the airlock and enter. A robot will greet you, asking you to drop your wet diving gear before you see the queen. It will then direct you to another hallway, where it will ask why you came to Atlantis. Simply respond with "scepters." It will now lead you into the queen's throne room.

The Atlantian queen will appear when you click on the door to the right. She will tell you to go kill the demon sleeping behind the grate that she will give you the key to. You will need to exit back the way you came all the way back to the tunnel.

Find the grate near the tunnel and click on it. It should open, revealing a low hallway. At the end of the hallway is the demon, snoozing. Throw the trident at him, and he will die instantly. Return to Atlantis, and follow the robot to the queen again. She will refuse to turn over the Water Scepter, and will leave the room, with the robot to deal with you.

Kill the robot and go through the door to the right where the queen came from. Lying there is the Water Scepter. Pick it up. From there you must use the 68000 chip to activate the computer that makes the submarine work. Use the submarine to get out !